Here's Agriculture Risk Coverage

The Senate Agriculture Committee has released a 2012 farm bill draft that would repeal direct payments, countercyclical payments and the average crop revenue election (ACRE) program.

The bill, if it becomes law, would set up a new Agriculture Risk Coverage, a revenue protection program that gives farmers a one-time choice of coverage at the individual level or the county level, if a county is approved for the program. Payments would be more generous for losses triggered by a county-wide drop in revenue.

The bill to reauthorize farm programs through 2017 keeps nonrecourse marketing loans. But for nearly all commodities, at the same level as in 2008. That's $2.95 a bushel for wheat, $1.95 a bushel for corn, $6.50 a bushel for long grain and medium grain rice and $5 a bushel for soybeans. Rice farmers had been seeking a higher loan rate.

The Average Risk Coverage would apply to each commodity. The coverage would be based off a five-year olympic yield average (tossing out the high and low years) of yields multiplied by the five-year olympic average of national marketing year prices. Yields are either individual or county-wide, depending on the program you choose.

The program takes a bite out of potential payments several ways:

First, the Agriculture Risk Coverage guarantee offered by the farm bill would be 89% of that average benchmark revenue.

The second limit is the payment rate. Each year's crop revenue will be calculated by yields times the mid-season price for that commodity. Payments are made if that revenue falls below the guarantee, but they can't be bigger than 10% of the benchmark revenue.

The third limit is the amount of eligible acres of the covered commodity. If you sign up for county-wide coverage, payments are made on 75% of your acres. If you sign up for the individual level, payments are on 60% of your acres.